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Value Wars 2.0: The Value Menu Revisited

Foodservice Brief — May 2018

In December 2017, McDonald’s announced it would renew its focus on value through a new value menu that would launch in January 2018. For McDonald’s, the primary business objective was to bring back customers lost over the past few years when the chain moved away from promoting its Value Menu and began promoting other parts of its menu. Other QSR chains, like Taco Bell and Jack-in-the Box, introduced value offerings of their own to compete directly with that of McDonald’s.

The New Value Offers

Taco Bell announced new additions to the already-popular $1 Cravings Menu at the end of 2017. These new additions include a variety of menu items priced at $1, totaling 20 over the course of 2018, including the popular Nacho Fries LTO.

McDonald’s Dollar Menu offers a choice of a Sausage Burrito, McChicken sandwich, Cheeseburger, or any size soft drink for $1. For $2, there are Sausage McGriddles, two-piece Buttermilk Crispy Tenders, a Bacon McDouble, or a small McCafé beverage. For $3, the menu includes a Sausage McMuffin with Egg, a Classic Chicken Sandwich, a Triple Cheeseburger, or a Happy Meal.

The Jack- in-the Box “Value Done Jack's Way” offers four chicken nuggets for $1, breakfast pockets for $2, three tacos and small drink for $3, and a Bonus Jack Combo (small fries and a small drink) for $4 or $5 (varies by location).

Understanding the Impact of Value Wars 2.0

There is considerable interest from foodservice marketers in understanding the impact this new round of value offers has had on the chains that entered the fray. We conducted a study to answer questions specific to the new offers from McDonald’s, Taco Bell, and Jack-in-the Box. These included:

Who are the buyers interacting with the value menus?

How broad was the appeal of each offer?

What was the impact on each chain’s customer base?

Did the offer attract new buyers? Did it increase visit frequency among existing users?

How are buyers using the value menu?

Are they piecing together meals? What is the likelihood of also purchasing off the regular priced menu?

We used our Checkout data to answers these questions. Checkout provides longitudinal purchase information directly from consumers’ receipts. The analysis covered the value menu offerings from the three chains for the month of January 2018. Presented below are some findings from the report.

How do value menu buyers vs. non-buyers compare on visit frequency and party check?

On average, value menu buyers’ visit rate was higher than that of non-buyers. While their average party check was less than the average for non-buyers, their visit frequency resulted in higher overall spend than non-buyers’ spend in January 2018.

How are buyers using the value menu?

Value menus are used to help drive traffic, especially during difficult times. The hope was that once customers ordered from the value menu, they would also purchase from the regular-priced menu. The desired outcome was achieved. While results varied by individual chain, on average, 72 percent of consumers who purchased from the value menu also purchased from the regular menu on the same visit.